Caixin
Aug 02, 2019 03:22 AM
BUSINESS & TECH

Anti-Graft Storm Continues Rattling Liquor Giant

Moutai’s namesake liquor, known as China’s “national liquor,” is often served at Chinese state banquets and presented as a diplomatic gift. Photo: VCG
Moutai’s namesake liquor, known as China’s “national liquor,” is often served at Chinese state banquets and presented as a diplomatic gift. Photo: VCG

A graft crackdown continued rattling the world’s most valuable liquor maker as one more senior executive faces criminal charges.

Gao Shouhong, former deputy general manager of Kweichow Moutai Group, was expelled from the Communist Party and removed from public office for serious violations of party discipline and laws, China's top anti-graft watchdog said Thursday afternoon.

Gao was removed from the post of Moutai’s deputy general manager in early July as the Guizhou-based company shuffled its top management team in the wake of a graft scandal involving its lucrative retail business.

The fall of Gao followed that of Yuan Renguo, former chairman of Moutai who was ousted from the party in May and faces prosecution on corruption charges. Yuan used dealer licenses for Moutai liquor as tools to pull political strings and was involved in exchanges of sex, money and power, the Central Commission for Discipline Inspection (CCDI) said in late May.

Moutai, which became the world’s most valuable liquor company in 2017, has been at the center of an anti-graft storm since May when investigators targeted Yuan during a probe of Wang Sanyun, former party chief of the southwest province of Gansu, and Wang Xiaoguang, a former vice governor of Guizhou. The company stepped up a reshuffling of its sales network and in July replaced most of its senior executives.

Days after Yuan’s downfall, Moutai’s former e-commerce chief Nie Yong was arrested on suspicion of corruption. Nie was suspected of opening brick-and-mortar specialty Moutai stores under his own name, a source told Caixin.

The CCDI’s branch in Guizhou, home of Moutai, said Thursday that Gao used his position to gain benefits for others and received huge sums of bribes. He faces prosecution on corruption charges.

Gao was disloyal and dishonest to the party and resisted investigation by party authorities, the CCDI said in a statement. He violated party rules by accepting gifts from others and taking illicit equity and positions in business entities. Gao also violated ethical codes and had an appetite for vulgar interests, the graft buster said.

Gao was named Moutai’s deputy general manager in 2013 after four years as assistant to the general manager. He was legal representative and senior executive of several Moutai subsidiaries, business registration records showed.

Earlier this month, Moutai reported its slowest six-month sales growth in three years as it pivots to a direct-sales strategy to root out graft.

Moutai’s Shanghai-listed shares closed at 959.3 yuan per share on Thursday, down 1.37%, making the company’s value 1.21 trillion yuan ($176 billion). The stock reached a record 1,001 yuan June 27 to become China’s first 1,000-yuan stock.

Contact reporter Han Wei (weihan@caixin.com)

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